1. Individual Problems 14-1

Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $80. Each of the high-value consumers buys one doll and two accessories and is willing to pay $157 in total.

Mattel is currently considering two pricing strategies:

	Strategy 1: Sell each doll for $40 and each accessory for $40
	Strategy 2: Sell each doll for $3 and each accessory for $77

In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy.

	Revenue from Low-Value Customers	Revenue from High-Value Customers	Total Revenue from Strategy
$80 Value, 1 Accessory	$157 Value, 2 Accessories	($)
($)	($)
Strategy 1
$40 doll + $40 accessory
Strategy 2
$3 doll + $77 accessory

The strategy that generates the most revenue is strategy .